what account(s) appear unusual? What fraud scheme(s) might cause this activity?

Template Appendix 2 Table 1 Statements of Income Horizontal Analysis* Vertical Analysis 20X4 20X5 20X6 20X2 20X3 20X4 20X5 20X6 20X1 20X2 20X3 20X4 20X5 20X6 20X1 20X2 20X 1,408,997 3,398,777 6,262,582 11,613,037 12,250,073 35.12% 78.53% 84.26% 85.44% 5.49% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Net sales 1,903,788 Cost of sales 1,132,148 1,318,603 2,727,424 3,874,442 4,312,779 3,867,373 16.47% 106.84% 42.05% 11.31% -10.33% 80.35% 69.26% 80.25% 61.87% 37.14% $1.57% 14.83% 19.65% 30.74% 19.75% 38.13% 62.86% 68.43% Gross profit 276,849 585,185 671,353 2,388,140 7,300,258 8,382,700 111.37% 14.72% 255.72% 205.69% 799,486 1,001,529 1,049,381 1,900,984 2,492, 172 1,714,501 25.27% 4.78% 81.15% 31.10% 31.20% 56.74% 52.61% 30.88% 30.35% 21.46% 14.00% Selling & Marketing 3,317,128 3,257,546 3,804,200 6,467,306 7,537,444 7,539,311 -1.80% 16.78% 70.00% 16.55% 0.02% 235.42% 171.11% 111.93% 103.27% 64.91% 51.55% General & Admin expenses 316,941 214,287 196,600 -32.39% 8.25% 0.00% 0.00% 0.00% 5.06% 1.85% 1.60% R & D Total operating expenses 4,116,614 4,259,075 4,853,581 8,685,231 10,243,903 9,450,412 3.46% 13.96% 78.94% 17.95% -7.75% 292.17% 223.72% 142.80% 138.68% 88.21% 77.15% Operating income (loss) (3,839,765) (3,673,890) (4,182,228) (6,297,091) (2,943,645) (1,067,712) -4.32% 13.84% 50.57% -53.25% -63.73% -272.52% -192.98% -123.05% -100.55% -25.35% -8.72% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Other income (expense) Interest Income 67,768 53,835 137,253 159,461 57,256 -20.56% 154.95% 16.18% -64.09% -100.00% 4.81% 2.83% 4.04% 2.55% 0.49% 0.00% (590,970) (397,674) (686,315) (940,410) (2, 705,835) (1,320,934) -32.71% 72.58% 37.02% 187.73% -51.18% -41.94% -20.89% -20.19% -15.02% -23.30% -10.78% Interest expense Other 6,712 21,122 40,605 30,280 (7,952) 4,523 214.69% 92.24% -25.43% -126.26% -156.88% 0.48% 1.11% 1.19% 0.48% -0.07% 0.04% 283,500 -100.00% 0.00% 0.00% 8.34% 0.00% 0.00% 0.00% Write-off accrued license fees 0.00% 0.00% 7.98% 0.00% -10.54% Write-off Notes Receivable (500,000) (1,291,636) -100.00% 0.00% (2,286,075) 0.00% 0.00% 0.00% 0.00% 0.00% -18.66% Finance related expense 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% $ (4,356,255) $ (3,996,607) $ (4,407,185) $ (7,547,760) $ (5,600,176) $ (5,961,834) -8.26% 10.27% 71.26% -25.80% 6.46% -309.17% -209.93% -129.67% -120.52% -48.22% -48.67% Net income (Loss) Basic & Diluted EPS (0.04) (0.04) (0.03) (0.04) (1.56) (0.86) Additional Information Depreciation & Amort. Expense 421,542 475,542 571,527 943,473 1,026,805 852,378 Company's 10K Filings with the SEC4c:mmwmmbmrvomooxrmmmeAommwamawn3o"" ASSETS Current assets: Cash and cash equivalents Accounts receivable, net Prepaid expenses & Other assets Notes receivable . related parties Notes receivable Total current assets Property, plant, and equipment, net Security deposits Notes receivable - related parties Other Assets Total Assets LIABILITIES AND STOCKHOLDERS EQUITY Current liabilities: Accounts payable Accrued expenses Notes payable Notes payable - related party Deferred Revenue Current portion of capital lease Convertible notes payable Total current liabilities Long-term notes payable Convertible notes payable Capital lease - long term Total liabilities Stockholders' equity Capital Stock Retained Earnings (Accum. Decits) Total stockholders' equity Total liabilities and stockholders' equity N/A = Do not need to calculate Template Appendix 2 Table 2 Balance Sheet Horizonhl Analysis" Vertical Analysis M M M w M M M M M M M M M M M 1,661,213 1,522,922 1,186,939 610,736 29,822 N/A -8.32% -22.06% 48.55% -95.12% 33.58% 21.11% 16.48% 6.98% 0.53% 269,566 568,811 956,710 4,432,854 796,487 N/A 111.01% 68.19% 363.34% -82.03% 5.45% 7.88% 13.28% 50.69% 14.05% 375,966 972,256 308,065 739,013 344,729 N/A 158.60% 68.31% 139.89% 53.35% 7.60% 13.48% 428% 8.45% 6.08% 37,500 N/A 400.00% 0.00% 0.52% 0.00% 0.00% 0.00% 1,231,474 901,728 455,458 177,600 405,000 N/A -26.78% 49.49% 61.01% 128.04% 24.89% 12.50% 6.32% 2.03% 7.14% 3,538,219 4,003,217 2,907,172 5,960,203 1,576,038 N/A 13.14% -27.38% 105.02% -73.56% 71.52% 55.49% 40.36% 68.16% 27.79% N/A 0.00% 0.00% 0.00% 0.00% 0.00% 1,301,468 2,475,080 3,000,651 2,603,483 1,941,750 N/A 90.18% 21.23% 43.24% ~25.42% 26.31% 34.31% 41.66% 29.77% 34.24% 97,748 - - - 1,877,614 N/A 400.00% 1.98% 0.00% 0.00% 0.00% 33.11% 9,722 N/A 400.00% 0.20% 0.00% 0.00% 0.00% 0.00% 735,869 1,295,378 180,646 275,413 N/A 76.03% -86.05% 52.46% 0.00% 10.20% 17.98% 2.07% 4.86% 8 4,947,157 7,214,166 3 7,203,201 S 8,744,332 $ 5,570,815 N/A 45.82% -0.15% 21.40% -35.15% 100.00% 100.00% 100.00% 100.00% 100.00% 1,177,014 1,222,801 2,032,557 1,858,486 1,910,665 N/A 3.89% 66.22% 8.56% 2.81% 23.79% 16.95% 28.22% 21.25% 33.69% 433,942 458,452 232,169 222,633 2,549,593 N/A 5.65% 49.36% 4.11% 1045.20% 8.77% 6.35% 3.22% 2.55% 44.96% 293,900 1,671,819 1,518,739 2,720,006 153,221 N/A 468.84% -9.16% 79.10% -94.37% 5.94% 23.17% 21.08% 31.11% 2.70% 211,867 250,000 - - - N/A 18.00% 400.00% 4.28% 3.47% 0.00% 0.00% 0.00% 124,459 100,349 58,244 78,387 28,657 N/A 49.37% 41.95% 34.58% -63.44% 2.52% 1.39% 0.81% 0.90% 0.51% 142,172 934,594 597,933 187,155 46,966 N/A 557.37% -36.02% 68.70% -74.91% 2.87% 12.95% 8.30% 2.14% 0.83% 10,000 10,000 1,383,440 - 1,474,775 N/A 0.00% 1.373440% 400.00% 0.20% 0.14% 19.21% 0.00% 26.01% 2,393,354 4,648,015 5,823,082 5,066,667 6,163,877 N/A 94.21% 25.28% 42.99% 21.66% 48.38% 64.43% 80.84% 57.94% 108.69% 0.00% 0.00% 0.00% 0.00% 0.00% 225,509 206,576 16,145 10,129 N/A 8.40% -92.18% -37.26% 0.00% 3.13% 2.87% 0.18% 0.18% - - 2165793 - - N/A 400.00% 0.00% 0.00% 30.07% 0.00% 0.00% 202,222 336,158 231,358 46,691 - N/A 66.23% -31.18% -79.82% 400.00% 4.09% 4.66% 3.21% 0.53% 0.00% 2,595,576 5,209,682 8,426,809 5,129,503 6,174,006 N/A 100.71% 61.75% -39.13% 20.36% 52.47% 72.21% 116.99% 58.66% 108.87% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 20,634,583 24,694,671 29,014,339 39,452,952 41,296,766 N/A 19.68% 17.49% 35.98% 4.67% 417.10% 342.31% 402.80% 451.18% 728.23% (18,283,000) (22,690,187) (30,237,947) (35,838,123) (41,799,957) N/A 24.11% 33.26% 18.52% 16.64% 669.57% -314.52% 419.78% 409.84% -737.11% 2,351,583 2,004,484 (1,223,608) 3,614,829 (503,191) N/A 44.76% 461.04% -395.42% 413.92% 47.53% 27.79% 46.99% 41.34% -8.87% $ 4,947,159 3 7,214,166 S 7,203,201 3 8,744,332 S 5,670,815 N/A 45.82% -0.15% 21.40% -35.15% 100.00% 100.00% 100.00% 100.00% 100.00%